Nubank reduces losses, has a slight improve in delinquency and publicizes a president
In the second quarter, Nubank reached 65.3 million customers, increased average revenue per active customer, but saw delinquency over 90 days rise slightly. Youssef Lahrech will take over as president and report directly to David Vélez
In a quarter in which most investment banking analysts are keeping an eye on the level of delinquency, Nubank announced a new president and a result that showed a slight increase in the NPL (Non-performing loan) above 90 days when compared to first three months of 2022.
In the second quarter of 2022, delinquency over 90 days was 4.1%, slightly up from 3.5% in the same period last year. The good news is that the 15-90 day NPL was stable at 3.7%. An important detail: in this quarter, Nubank started to consider loans not paid after 120 days as accounting losses – before, the criterion was 360 days.
“We have always been very careful in providing credit and most of our customers are banked”, says David Vélez, co-founder and CEO of Nubank, to the NeoFeed. “Of the 65 million customers, only 4 million have credit. We have grown up very carefully and with low limits.”
Nubank’s credit portfolio increased from US$8.8 billion to US$9.2 billion in the second quarter. About 75% of this volume is credit card. The rest is personal credit, which grew 7% in the second quarter. “We repriced the product from 4% to 5.6%”, says Guilherme Lago, CFO of Nubank.
The fintech also released, this quarter, the return on capital of its credit products. According to Lago, the credit card has a return of 80% and the personal credit, 120%. “There is a lot of talk about default, but it is only a part of it”, says Nubank’s CFO.
According to Lago, the main bottleneck for Nubank to grow in credit is not demand, capital or liquidity. “The only bottleneck to growth is our comfort and our appetite for credit,” he said.
At the same time, Nubank reduced its net loss from US$45.1 million in the first quarter of this year to US$29 million in April, May and June 2022. But the result is worse than the second quarter. last year, when it was US$ 17 million.
In Brazil, the company’s main market, Nubank recorded an accounting net income of US$ 13 million in the first half of this year. This money, according to the company, was reinvested in other fintech verticals, as well as contributed to expansion in Mexico and Colombia.
Customer and revenue growth
Nubank showed an increase of 5.7 million customers, totaling 65.3 million customers in Brazil, Mexico and Colombia, an increase of 57% compared to the same period last year.
Average revenue per active customers (ARPAC) went from $4 a year ago to $7.8. As a result, total revenue reached a new record in the second quarter, reaching $1.2 billion, an increase of 108% compared to the same period last year.
In Vélez’s view, this represents the diversification of Nubank’s products. The credit card, for example, has 29 million customers. NuConta, 45 million. And the personal loan, 4 million.
Other products also contributed. The insurance solutions, launched last year, reached 700 thousand active customers. The investment platform NuInvest reached 5 million. And NuCripto hit 1 million in July of this year, just three weeks after its launch.
Along with the results for the second quarter, Nubank also announced a reorganization of its operational management model. Vélez will continue as CEO and focus on the long term, including product development, expansion into new markets and new acquisitions.
Moroccan executive Youssef Lahrech, current COO, will assume a new role as president and report directly to Vélez. In the new position, he will focus on the day to day of the operation and will maintain the position of COO.
Lahrech has been at Nubank for two years, during which time he took care of the credit strategy. He made his career at Capital One, an American credit card and personal loan company, and holds a degree in mathematics in France and an MBA from MIT.
Cristina Junqueira, who is co-founder and CEO of Brazil, will also assume the position of director of growth, managing the market team’s operations and growth strategies with a focus on Brazil, Mexico and Colombia.
“We never reorganized ourselves when we started with a purple card on California street, in São Paulo, in 2013”, justified Vélez, the changes. “We had a product-focused structure and now it will be customer-focused.”
Nubank’s shares closed this Monday, August 15, up 10.12%, quoted at US$ 4.68, as investors expected the result of the second quarter. The company is worth $21.6 billion on the New York Stock Exchange. In the year, the shares have lost 53.1%.
The main investment banks have different views on Nubank. Bradesco BBI, Santander and Itaú BBA, for example, recommend selling the paper and estimate a target price between US$3.30 and US$4.50. On the other hand, Goldman Sachs and UBS recommend buying the shares. The target price is between $11.50 and $12.